In a world dominated by a pandemic, you might wonder how its affecting the 10 biggest pharmaceutical companies in the world in 2020. The pharmaceutical industry is a trillion dollar industry globally, achieving the milestone for the first time in 2014, and the biggest companies are getting a huge piece of the pie.
The pharma
industry can vary significantly from country to country, based on the laws
regulating it. After all, there is a huge question of balancing the importance
of saving lives of people with profits and the money needed for research and
development to develop such drugs. This is why many countries across the world
regulate the maximum price at which a drug can be sold, to allow the companies
high margins and profits, while enabling more people to be able to purchase the
drug as well.
Unsurprisingly, the United States is not one of those countries. In the US, there are no regulations on raising prices, which is why you have people like Martin Shkreli, who jacked the price of an important drug by 700% and cause an outrage, even though the outrage was purely on a moral level, as legally, his opponents did not have a leg to stand on. He is the poster boy of Big Pharma, a term coined for the biggest pharmaceutical companies in the US who are said to do anything, even if its immoral or illegal, to fill their coffers rather than actually focus on saving lives. They haven't paid over $2 billion in taxes in the US, and are able to fill the image of the typical capitalist US company.
While you might
think that pharmaceutical companies have profited from the pandemic, that is
actually not the case, at least in the short term. Because of lockdowns,
supplies have been disrupted, and once any part of the supply chain is
compromised, so is the entire operation. On the long term, on the other hand,
there might be a lot to gain for these companies as well. These pharma
companies are being given billions of dollars already by governments to develop
a vaccine for Covid-19. Any company which makes the breakthrough first is
looking at a huge windfall, while companies following it will also profit
handsomely from the same.
To determine the
biggest pharma companies in the world, we considered both their revenues and
their net income, the two major metrics to determine the strength of a company.
Many websites have got this wrong, for example, you will find that many
websites rank Johnson & Johnson as the pharma company with the highest
revenue with $82 billion. But Johnson & Johnson is a conglomerate, of which
pharmaceuticals is just one segment. Hence, we have considered only its pharma
revenue and net income, all of which has been gleaned from the annual reports
of each company. They are still not as profitable as the tech industry though,
which dominates the 10 most profitable companies
in the world. So let's take
a look at the biggest pharma companies likely to grow even more significantly
if they develop the vaccine first, starting with number 10:
10. AstraZeneca
With revenues of
over $23 billion and net income of around $1.2 billion, this Swedish English
pharma company is one of the biggest players in the pharma industry and has a
deal with the British government to roll out 30 million doses of the Covid 19 vaccine early next year, which
is already in development.
9. Bristol-Myers Squibb
European and
American countries dominate the list, and Bristol-Myers Squibb is an American
company, which has revenue exceeding $26 billion while the net income is around
$3.4 billion.
8. Sanofi
Sanofi is a
French pharma giant which has a revenue of over $27 billion, but is known for
its fluctuating profit, which was $2.8 billion consolidated in 2019.
7. Abbvie
Abbvie is one of
the newest companies in the list having been founded in 2013 only, but has made
over $33 billion in revenue and $7.9 billion in net income.
AbbVie Inc (NYSE:ABBV)
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6. GlaxoSmithKline
GSK is one of
the biggest companies the world, and is also among the 100 most profitable
companies in the world. It is a British company, but the majority of its
revenue is derived from the US, and is listed in several countries, including
the US, boasting revenue of $43.54 billion and operating profit of $6.8
billion.
GlaxoSmithKline plc (ADR) (NYSE:GSK)
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5. Johnson & Johnson
It may be in the
news for all the wrong reasons, but its pharma sector alone produced over $42.2
billion, more than half of the total revenue of this giant conglomerate.
4. Merck & Co. Inc
Another US
company makes our list of biggest pharmaceutical companies in the world in
2020, due to its revenue of $46 billion and net profit of over $10.1.
3.
Novartis
Switzerland makes its entry now, as Novartis,
one of the most recognized global names in pharma, has made its presence felt
on a global level, with revenue of $47 billion and net income of $12.2 billion.
Despite its profitability, hedge funds tracked by Insider Monkey don’t believe
Novartis is a great stock to buy. We track more than 800 hedge funds and only
21 of these hedge funds had a bullish position in Novartis at the end of June.
Hedge funds’ bullish Novartis positions
stood at 30 at the end of March. This means at least 9 hedge funds sold their
entire stake in Novartis during the second quarter. Billionaires Ken Fisher and Jim Simons‘ funds each had more than $700 million
in NVS.
2. Roche
Two Swiss companies appear in quick
succession, as Roche is one of only two pharma companies in the world which
actually has revenues exceeding $50 billion, while its net income is $13.6
billion. Since Roche shares aren’t listed in any of the major US exchanges, we
have no idea about hedge fund interest in this pharmaceutical giant.LininShutterstock.com
1. Pfizer
Topping the list of the 10
biggest pharmaceutical companies in the world in 2020 is Pfizer,
an American company, which has amazing revenues of $51 billion, and net income
nearing $16 billion. It provides employment to over 88,000 people across the
globe.
Dow Jones Industrial Average (DJIA)
recently dropped this #1 pharma stock from its index and replaced it by the
faster growing Amgen (AMGN). This doesn’t mean that AMGN is a
better stock to invest in than Pfizer. Pfizer was in the portfolios of 66 hedge
funds tracked by Insider Monkey, whereas only 51 hedge funds liked AMGN enough
to buy the stock. So, hedge fund managers think PFE is a better stock to buy
than AMGN. We should note that PFE isn’t among the top 10 hedge fund stocks though.
Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4%
in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points.
These stocks gained 33% in 2020 through the end of August and still beat the
market by 23.2 percentage points.
